As you know, our two companies have been considering a combination for some time now and we’ve made substantial progress in prior discussions on identifying real, actionable synergies that would benefit our respective shareholders, employee and customers. We have the highest regard for the management and talent at all levels of Stratasys and believe that there are extraordinary advances that our respective companies and teams will make for the benefit of all constituencies by combining our two companies, as we have emphasized to you previously in our proposals dated January 17, 2021, March 9, 2021, November 24, 2021 and March 22, 2023.

Indeed, as our respective teams confirmed after engaging in reciprocal diligence exercises in New York this past fall, the cost synergies arising from a combination of our two companies will reach approximately $100 million – a synergy figure that is double the cost synergies that Stratasys is estimating may arise from the proposed all-stock merger with Desktop Metal. The market appears to have serious questions about the idea of an all-stock merger with Desktop Metal as evidenced by the decrease in the trading price of Stratasys stock and skeptical analyst comments in response to the announcement of the proposed merger with Desktop Metal. Fortunately, the opportunity to negotiate a superior combination with 3D Systems, with greater synergies and future prospects, remains available and we would welcome the engagement.

More broadly, a 3D Systems – Stratasys combination would provide our respective customers, employees and shareholders with:

• Unmatched global scale: Support for customers from initial adoption through servicing of their installed systems as they integrate and expand additive manufacturing in factory production environments around the world.
• A comprehensive joint portfolio of product offerings: The greater range of additive technologies will help drive customer adoption of additive manufacturing by building a one-stop shop for their factory production needs.
• Industry leading application support and innovation capabilities: The more robust set of solution options will help meet customer application needs, driven by the best of breed technologies and deploying them to the applicable market segments under the guidance of highly experienced application engineers from both companies.
• An increased ability to invest in emerging technologies: The additive manufacturing industry is rapidly evolving with emerging players developing novel technology and approaches. Integrated R&D teams would enable increased investment in new materials, software, hardware, and processes to meet current and future customer application challenges.
• Enhanced go-to-market solutions: The strong reseller network and joint sales organization that leverage the combined portfolio and our collective capabilities in application innovation and solution development will improve market coverage and access to customers looking for additive manufacturing solutions.
• Greater opportunities for cost efficiencies: Our respective teams have agreed that significant synergies will result from a 3D Systems–Stratasys combination, thereby achieving meaningful value creation for our respective shareholders. The scale of the combined entity will bring with it an opportunity for significant cost reductions of approximately $100 million through supply chain efficiencies, design-for-cost initiatives, and synergistic product development, sales, and administrative functions, while enabling effective global services support for enhanced customer care. These cost reductions may then be reinvested in growth opportunities and improve the profitability of the combined businesses.
• Customer value proposition: The combined company with a complementary product portfolio, industry leading R&D investments, a consultative solutions-oriented approach, and a strong financial profile will be a compelling partner to regional, national and multinational organizations considering significant investments in additive manufacturing.
  

We are prepared to take all necessary steps to realize this proposed combination. In addition, we understand that your board will have heightened duties of candor and disclosure to your shareholders under federal securities laws and applicable corporate law in connection with the proposed all-stock merger with Desktop Metal and the pending all-cash tender offer by Nano Dimension and the recommendations, solicitations and statements that you are making to investors and other market participants about these proposed transactions and the alternatives available to Stratasys. As a result, we consent to your disclosure of both this letter and the enclosed slides, in their entirety, to your shareholders as part of your fulfilment of your obligations to update and remedy what are now material omissions from your Solicitation/Recommendation Statement on Schedule 14D-9 and to avoid any material omissions from your ongoing recommendations, solicitations and other statements in connection with your proposed all-stock merger with Desktop Metal or your anticipated registration statement on Form F-4, as well as any other public filing or disclosure that you may elect to make to ensure that your shareholders are fully informed about this material alternative.

This proposal is subject to the satisfactory completion of reciprocal confirmatory due diligence and the negotiation, internal approval and execution of definitive documentation. We confirm that we are prepared to undertake and believe we can complete, with your cooperation, this confirmatory diligence and definitive documentation exercise without delay.

Thank you, Dov, for you and your Board of Directors considering this important transaction for our collective stakeholders. We want to stress that we are proposing and intend to be exclusively pursuing a friendly, non-hostile, negotiated and mutually acceptable transaction in the same spirit as our discussions to date. You will note that I have directed this letter to you alone, as Chairman of the Board for Stratasys, as I do not want to put Yoav Zeif in a position of perceived conflict of interest, given his expanded role in the announced Desktop Metal merger. I will add, on a personal note, that I have the utmost respect for Yoav and the progress Stratasys has made under his leadership. I would welcome his input and ideas in making this combination successful.

We have an unparalleled opportunity to transform this industry in the near-term for the benefit of our respective customers, employees and shareholders. Our team, including the 3D Systems’ executive team, our financial advisors at Goldman Sachs, and our legal advisors at Freshfields, stand ready to engage. I look forward to hearing from you.

Respectfully,
Jeffrey A Graves
Chief Executive Officer, 3D Systems Corporation

Goldman Sachs & Co. LLC is acting as exclusive financial advisor and Freshfields Bruckhaus Deringer (US) LLP, together with Herzog, Fox & Neeman in Israel, is acting as legal counsel to 3D Systems. 

Additional materials related to the proposal can be found on the 3D Systems investor relations website at investor.3dsystems.com.

About 3D Systems

More than 35 years ago, 3D Systems brought the innovation of 3D printing to the manufacturing industry. Today, as the leading additive manufacturing solutions partner, we bring innovation, performance, and reliability to every interaction – empowering our customers to create products and business models never before possible. Thanks to our unique offering of hardware, software, materials, and services, each application-specific solution is powered by the expertise of our application engineers who collaborate with customers to transform how they deliver their products and services. 3D Systems’ solutions address a variety of advanced applications in healthcare and industrial markets such as medical and dental, aerospace & defense, automotive, and durable goods. More information on the company is available at www.3DSystems.com.

Forward-Looking Statements

Certain statements made in this document that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In many cases, forward-looking statements can be identified by terms such as “believes,” “belief,” “expects,” “may,” “will,” “estimates,” “intends,” “anticipates” or “plans” or the negative of these terms or other comparable terminology. Forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to the company’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the control of the company. The factors described under the headings “Forward-Looking Statements” and “Risk Factors” in the company’s periodic filings with the Securities and Exchange Commission, as well as other factors, could cause actual results to differ materially from those reflected or predicted in forward-looking statements. In particular, we note that there is no assurance that a definitive agreement for the transaction referenced in this document will be entered into or consummated or that integration will be successful or synergies will be realized if such transaction were to be consummated. Business combination proposals, transactions and integrations are subject to numerous risks and uncertainties. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved. The forward-looking statements included are made only as of the date of the statement. 3D Systems undertakes no obligation to update or revise any forward-looking statements made by management or on its behalf, whether as a result of future developments, subsequent events or circumstances, or otherwise, except as required by law.